BOOK-TAX CONFORMITY INFLUENCE ON EARNING MANAGEMENT BEHAVIOUR: MITIGATING ROLES OF TAX CONSULTANTS AND AUDIT OVERSIGHT IN NIGERIA
DOI:
https://doi.org/10.67199/vrt2vg14Keywords:
Earnings management, engagement of tax consultants, Audit oversightAbstract
This study investigates the influence of Book-Tax Differences (BTD) on earnings management practices among manufacturing firms listed on the Nigerian Exchange Group over the period 2010–2024. Using an unbalanced panel data of 26 firms with 510 firm-year observations, the study employs Ordinary Least Squares (OLS) regression to examine both Discretionary Accruals-based Earnings Management (DAC_EM) and Real Earnings Management (REAL_EM). The results reveal that higher BTD, particularly when positive, significantly increases both discretionary accrual and real earnings management, confirming that firms exploit BTD to manipulate reported earnings. Heterogeneity analysis show that low book-tax conformity drive earnings management while high book-tax conformity curbs earnings management. Furthermore, the study examines the moderating effects of external tax consultants and audit oversight. Findings indicate that both mechanisms mitigate the association between BTD and discretionary accrual-based earnings management, as interaction terms are statistically insignificant. These results highlight the critical role of BTD in shaping earnings management strategies and underscore the importance of professional and regulatory oversight in curbing aggressive accounting practices in emerging markets.
Keywords: Earnings management, book-tax differences, engagement of tax consultants, Audit oversight
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